A joint deal between the government and various industries is hoped to "transform" the development of domestic properties and buildings through the use of innovative technologies.
The project, which was announced by business and energy secretary Greg Clark in a speech to the Northern Powerhouse Summit in Newcastle, will boost efforts to meet the government's target of delivering 1.5 million new homes by 2022.
Bringing together the construction, manufacturing, energy and digital sectors, the initiative will focus on new approaches that drive productivity in housing development and enable greater energy efficiency and affordability in the property market.
Digital design and offsite manufacturing are two of the key concepts at the heart of the so-called 'bytes and mortar revolution'.
One of its key objectives is to support the industrial strategy goal to halve the energy use of new builds by 2020 - consequently delivering lower energy bills for families and businesses.
Mr Clark pointed out that buildings account for approximately 30 per cent of all emissions, adding that the government wants to put the UK "at the global forefront in designing and building smart, energy efficient and affordable homes and buildings through the Clean Growth Grand Challenge, saving families money on their bills".
He added: "This sector deal is supported by the biggest government investment in construction for at least a decade and will drive economic growth and create well-paid, highly-skilled jobs in every part of the UK."
Some £420 million will be invested in the partnership, which could reduce the time taken to deliver new builds by 50 per cent.
According to recent research from the Home Builders Federation, new-build properties are proving increasingly appealing to first-time buyers, partly because of their energy efficiency, lower running costs and the benefits of the government's Help to Buy scheme.